Construction Industry News
Tata Steel and ArcelorMittal-Nippon Steel India (AM/NS India) are not allowed to bid for the National Mineral Development Corporation (NMDC) Nagarnar under construction steel unit of 3 million tons per year (mtpa) at Nagarnar in Chhattisgarh.
This leaves JSW Steel, Jindal Steel and Power, and newcomers to the steel sector like Adani Group and Vedanta into the fray.
In October 2020, the Center had approved the divestment of the unit from the parent company NMDC and the strategic divestment of the divested entity by selling its entire interest in it to a strategic player. NMDC is likely to complete the demerger process in August-September, which coincides with the facility's commissioning. After this, bids on the split entity would be launched.
NMDC may spend about Rs 22,000 crore, Rs 6,500 crore higher than the original estimate, for the factory mainly due to seven-year overrun.
Sr VP & Group Head, Corporate Sector Ratings, ICRA, Jayanta Roy, told media that the long-term outlook for India's steel industry is positive, given the massive investment expected in infrastructure. Therefore, a sizeable plant that is in a very advanced stage of commissioning should be attractive to steel players, as otherwise a greenfield steel project has a long run time.
A Greenfield steel mill the size of Nagarnar is rare. Apart from a 6 mtpa greenfield unit of JSPL in Odisha's Angul, which was commissioned in 2017, no significant greenfield steel unit has appeared in the present time. Meanwhile, steel companies have increased their capacities, but they are going through the brownfield route and removing bottlenecks from the existing units.
The Nagarnar Steel Plant is located on 1,940 acres and has a total of about 2,180 acres of land. In the next phase, the facility's capacity can be expanded by an additional 2 tons per year to 3 tons per year without the need for more land.
The product mix of the device is also attractive. Apart from hot rolled coils and auto-grade steels, it will have qualities for API pipe making, which are used in modern infrastructure, and products for LPG cylinder production.
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